I don't think I've ever met a person who made a lot of money who'd admit they were rich. The standard these days seems to be: you're rich if you could never work again for the rest of your life, and still live extremely lavishly, with the private jet and yachts and multiple houses. That sets the bar at maybe $100m net worth, which yes, very few people have.
Weirdly, I know people who make around $70k who claim that they're very well off, and seem to actually feel that way. But the people making $300k, $500k, $800k? Invariably they feel middle class, perhaps upper-middle-class, but not even that upper. My guess is that it has a lot to do with social circles and where you live. The guy making $70k who lives in a modest house and whose friends all work at coffee shops feels rich; the guy making $300k who lives on the upper east side of Manhattan and whose friends are all VPs doesn't.
My parents (both physicians) both readily admit they are rich. They also believe the highest tax bracket (their tax bracket) should be raised considerably.
That's nice to hear. I'm nowhere near the upper tax brackets at the moment, but I like to think that I would be okay (and even encouraging) of the taxes I did face in such a situation.
I know many people who make lots of money and are bitter about paying so much tax on it, but very few people who realize that the taxes they pay make a real difference in everyone's lives (especially the lives of those who are less fortunate). Or that the taxes they pay make possible all of the benefits the Federal, State, and local governments offer.
Sure, the government may not be the most efficient of entities, but I think it's difficult to make a serious argument that we would be better off without most of the services provided by the various levels of governments, or that they could easily be replaced. And none of these would be possible without some form of taxation (though how the taxes should be structured is up for reasonable debate).
While I believe that people should be fairly compensated for their hard work, and that we shouldn't penalize people for working harder, I also believe that it would benefit most people to stop and think about how much their taxes help to make this/any country a great place.
*disclaimer: this is mostly about the US, as this is my main experience, but I'd guess most of it applies to (at least some) other nations as well.
I don't disagree in principle, but I think there is far more value provided by state and local governments than by the Federal government. Roads, hospitals, schools, etc. are all local and state funded.
The Federal budget is mostly military spending (the US has no significant military adversaries) and Medicare spending (physicians, pharma and other "caregivers" prey on the elderly and have managed to channel this spending into profits... see Bush's prescription drug benefit/handout to those firms).
After that, the remaining 10% of the Federal budget probably makes a lot of sense. Sadly, most of what comes out of everyone's paycheck goes to fund military and medicare overspending.
Out of local spending, almost 30% come from federal government grants. Only 45% of the federal tax base is income tax, and only 15% of the local tax comes from income taxes.
Out of federal expenditures, about 45% of them are covered by defense, healthcare and medicare spending.
On your second point:What year is that data for? It looks to me as roughly 50% is covered by "Pentagon" and "Health" spending, not a far cry difference from the 45% my (seemingly outdated) economics textbook seems to show.
Hospitals are to varying degrees Federally tax exempt, and they of course collect payment from Medicare/Medicaid, but many, many hospitals are primarily supported by local and state governments.
This isn't to say that Federal funding isn't sometimes useful. Federal central planning built the interstate highway system for military purposes, and this had the side effect of making suburban living desirable, draining the tax base from cities and destroying some urban environments, leading to urban crime, poverty, etc.
Nonetheless, the highways have probably been helpful to the economy as a whole even if they did destroy some cities along the way.
My point is mainly to highlight that the primary interface with government services should be the local and state level. That we get so disproportionally excited about Federal laws/elections/officials shows that politics is mostly for entertainment/signaling purposes and that the useful roles of government are unglamorous and are typically accomplished quite effectively by the local municipality.
Incidentally, today is garbage day. I derive tremendously more utility from garbage day than I do (or ever will) from the Iraq war, Afghanistan war or Social Security.
Because their argument is not that they, specifically, should pay more in taxes. It is that the highest tax bracket should be taxed at a higher rate. To equate the two is a straw man argument.
I don't see how that's "hypocrisy". They're arguing that all people in a bracket, including themselves, should be taxed at a higher rate. Arguing that doesn't logically require also being willing to go it alone. Advocating raising taxes on the rich while hiding their own money in offshore bank accounts to avoid those taxes; that would be hypocrisy.
That said, I think this a terrible argument. Changes to the tax code only have an effect if they take effect across the broad tax base. That said, maybe someone should start a "I'll pay higher income taxes if 1,000,000 people join me" petition on Pledgebank.
I don't know, but that seems like the kind of snarky one-liner that doesn't add anything to the discussion. Because davidw said it so well, I'll just inline quote him here:
This is exactly the kind of comment that I feared we would see when articles like this start gaining traction. It's a cheese puff comment: it's got some taste, but it's empty. It has nothing to back it up, no content, no reasoning, no well crafted argument. It's just an empty "rah rah" type of slogan of the type that politicians regularly regurgitate. There is nothing new or clever about the comment, it's the sort of thing that's made the rounds elsewhere 100's of times. Being such a cheap, throwaway comment, it mostly/usually doesn't lead to particularly interesting discussions, as we can see here, despite a few good comments, but more zingers, one liners and similar "go home team!" cheering for one political side.
I think you misinterpreted my comment. It was intended to be pithy, not snarky. So your parents think that their current tax rate is too low, so I named a higher rate. Why is 80% outlandish?
My point was simply that it's a bit silly to bemoan the low rate of taxes today unless you name a rate that you think is reasonable. Clearly you think 80% is unreasonable. If one only thinks a 1-2% increase is reasonable, then stipulate that, rather than making the grandiose claim that taxes should raised considerably. Isn't an 80% rate a considerable increase?
The fact is, most people think that 80% is grossly unreasonable. Why? At least there should be a principled argument, not just a rich person bragging (via a complaint) that he/she could afford higher taxes.
I never said that. I said that, as given, your comment had no argument or reasoning. This is the comment you should have originally posted, not your two word question which vaguely implied your real argument.
90% superficially sounds unreasonable, because we have a tendency to think that wealth is distributed on a bell curve. But wealth is not distributed that way, it is distributed according to a power law, which means that a significant number of people make in excess of $100M per year while others make less than $1000. If wealth were distributed according to skill and ability, the ratio between the highest and lowest would be much lower and billionaires would be as rare as 100 ft tall people.
The idea that a person could personally contribute the equivalent of $100M of value in a year per their efforts and skills (which ARE distributed on a bell curve) is absurd. It is this mismatch between the distribution of ability and the distribution of wealth that the rich exploit. So for someone making $100M/year, a 90% tax rate is not unreasonable at all.
See, here's the issue isn't it? How much is enough? I do think the tea-partiers have a point. There most definitely is a level of taxation that greatly reduces people willingness to take risks in the hopes of future wealth. Is it 40%? 50%? 90%?
I don't know. I'm just pretty damn sure it's not what we're taxing the wealthy at now.
Disclaimer: I would be affected by these tax hikes.
I don't think it's social circles (although, that might be a by-product), rather parkinson's law kicking in at all levels.
The people I know making $70k don't feel rich–but that might be because they are married with kids. If the people you know are single, I could see how that would be different.
It's weird–I'm half-way between 70k and 300k now and I feel above middle-class but definitely not rich. We live modestly but have 4 kids and travel a lot.
Just to point out: by the definition of a lot of Americans, "travel a lot" is part of the definition of "rich". And it's a big part: most people can't really afford to travel at all. And for some people, "4 kids" is also part of that definition--especially if you treat them right. If you send them to private school, that's certainly the case.
(Personal anecdote which is not data: a lot of my family are autoworkers, and if you asked them they'd say they're doing pretty good, definitely middle class. One of my aunts on that side just got on an airplane for the first time in her life last year, because it was the first time she could afford the price of the ticket.)
This post is not meant to be snarky or insulting at all. But you are in the top few percent of the income distribution, and you don't feel rich because the things you spend the money on are things you think you should have. And you might be right! Because I think a life which involves family and travel would be a good thing, and that everyone should have that. But that doesn't mean most people can have it, or that those who can afford these things aren't rich.
"This post is not meant to be snarky or insulting at all. But you are in the top few percent of the income distribution, and you don't feel rich because the things you spend the money on are things you think you should have. And you might be right! "
Don't worry, I'm not insulted/offended at all. I'm fully aware that I'm in the top few percent of incomes.
And I should have qualified that–while I don't feel rich, I do consider myself extremely blessed (fortunate if you will). I should also add that I currently have no desire to become more rich (not that I don't want to succeed in business). I'm terrible at managing our money/budget at this level, so I see know need to add to it.
Yeah, I do know mostly single people making $70k. Some have families, but I can mostly think of reasons why it makes sense to me that they'd still feel well-off. A few live in generally poorer areas; e.g. someone making $70k in Fresno or Fort Wayne is doing well by local standards, and even though they have families to support, they're surrounded by other people who also have families to support who make closer to $50k. A bunch of the rest are immigrants, whose norms are calibrated by a lingering sense that the U.S. is absurdly rich any way you slice it, and that their lifestyle is quite nice compared to family back home.
An interesting case are the locals here in Santa Cruz who don't work over the hill in Silicon Valley. There aren't that many good local jobs, and my sense is that the people who make $70k whose social circle is mostly other non-commuting locals feel well off, despite the fact that it's a pretty high-cost-of-living area--- because they know lots of surf bums, coffee shop employees, and people who have to commute from Watsonville because they can't afford to live in Santa Cruz or Capitola.
Just curious: Define "modestly". Do you own your house? Is it a big house? Is it a nice area?
I'm always fascinated by the varying definitions of living modestly. I don't mean that as an attack on you in any way. I find that people definitions really do differ quite a bit. What's yours?
No. No. Sorta. (crappy neighborhood in a nice general region (CA central coast))
Then again, we're only staying here for 6 months. Wife and I both have used cars ('o6 & '04) that we bought cash. Home furnishings are all used/cheap as we've learned our children tend to destroy things. We don't buy many "nice/expensive" things other than my camera gear and my wife's shoes/clothes.
I don't think this makes the point that 500k/yr isn't rich but it does make the point that people's expenses will grow to fit their income. I've known several people in this pay bracket and I've often found their standard of living isn't all that much better than mine. They have a 60" TV instead of my 42" and a BMW instead of my Chevy but their still watching the same shows and stuck in the same traffic.
Produce and reap the reward of wealth later. With some luck, you'll be able to afford that 60'' TV and a fancier Chevy.
It still won't solve the traffic congestion problem though. That will take explicit toll fee for using the roads, and that won't be popular.
Division of labor and global trade has made us incredibly wealthy compared to the past. So focus on a niche and make people richer. Remember, self-sufficiency mean we have to make our own clothes, grow our own food, etc.
Or, instead of going along like everybody else, find a job where you're valuable, take a pay cut, work 30 hours a week and take 2 months off a year and make your schedules so you're never stuck in traffic again.
The belief that material wealth is always more valuable than being able to spend time doing what you want is astounding.
While I feel sorry for the guy whose taxes are about to go up substantially, he shouldn't be trying to claim that $500K a year isn't rich. It is rich.
Instead he should be pushing the argument "Why the hell should I have to pay for all these government just because I'm more productive than other people? If I use $10,000 a year worth of government services why am I paying $200,000 for it while some other guy using $10,000 a year of government services pays nothing? Why can't the burden be spread more equally among all those who use government services instead of lumped almost entirely on the top 10%?"
That's the argument he should be pushing. Of course there are possible responses to that, but it's a better starting point for debate than "I only make $500K a year, you should tax the real rich, who are making $800K a year!"
I'm not sure $10,000 is a fair-market value for the government services. Probably the biggest single service a government provides to well-off people is protection for their property and person, via policing, military defense, and a centralized property register and court system willing to enforce their ownership of assets. The value of that guarantee goes up with your level of asset ownership.
While I feel sorry for the guy whose taxes are about to go up substantially
that's where you lost me.
His taxes aren't going to go up...his tax CUTS are about to expire...as they were supposed to. The sunset clause was part of the original bill...instead of bitching that his taxes are going to go back to normal...he should be happy he got to enjoy this tax break for all these years.
And "substantially"? His taxes are only going up by ~3%
> His taxes aren't going to go up...his tax CUTS are about to expire
That isn't a meaningful distinction for individuals. It only means something for the government's budget outlook. It is a little silly for the law professor to complain about a tax increase without considering the alternatives, which are insolvency or drastic budget cuts. Regardless of the merits of the latter option, it's clearly not politically feasible.
And "substantially"? His taxes are only going up by ~3%
Which is, like, $15,000 a year. That's substantial -- in fact it's more than most people pay in taxes at all!
We should start from the fundamental question: why should this guy pay more than Joe Schmo at all? Why shouldn't the tax bill be spread equally over everybody, so it's (say) ten thousand dollars per head? That would be what I call "fair".
It's also not possible because some people just aren't getting off their butts and earning $10K per head, but that should be considered a deviation from fairness. We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.
No, it isn't. That not how taxes work. His marginal rate for the highest bracket will go up, for his first 250k his taxes will be exactly the same. It's hard to take an argument seriously from someone about taxes being too high if they don't even know how they're computed.
> We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.
If everyone is taxed at 15k a head, then the minimum that anyone can work for jumps to 30k a year, or 20k part time. That means hyper-inflation or mass unemployment. That means that college would incur an additional 60,000 in opportunity cost, costing this country a skilled labor base.
You still need people to man the circle Ks. If you suddenly have to mechanize all of these positions (because the price of labor has doubled or tripled), you end up with even higher unemployment. And I promise you, when you have 30% unemployment and people coming for your head, you will see armed revolt.
It's simple. You do not press on poor people because they are the foot soldiers in a revolution, and your soldiers are their brothers.
"We should start from the fundamental question: why should this guy pay more than Joe Schmo at all? Why shouldn't the tax bill be spread equally over everybody, so it's (say) ten thousand dollars per head? That would be what I call "fair"."
Let us leave aside "fair" or "unfair" for a moment.
The problem with a poll tax is that you can only raise the amount of money you can charge the poorest people you are taxing multiplied by the number of people you are taxing.
A tax scheme that operates on a percentage of income (or even increases that percentage as income increases) allows the government to maximize its income in the same way that having higher margin 'premium' products and lower margin "economy" products so rich people can pay more and poor people can pay less allows a business to maximize it's income.
maybe so. But even without the relationship you describe between what you pay and what you get, a progressive tax system still maximizes the government's income vs a poll tax.
I'm just pointing out that even before you get to talking about what's fair or what's right, you simply could not support a government as expensive as ours on a poll tax. - so there is a reason why we have a progressive tax rate that has nothing to do with perceived fairness.
"We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share."
In a distribution as heavily skewed as US income, "below-average" would probably be around 80% - 90% of the population. Perhaps you meant 'median' or something else other than 'average'.
You do realize that 48% of all Americans pay $0 dollars in Federal Income tax. The top 10% pay 40% of the pie. I'm for the tax cuts expiring but I do also agree with the whole "equality" argument. I'm of the generation where I'll probably never see any Social Security but I do know that I'm paying for it.
First, the primary driver of this "inequality" is the widening gap between the rich and the poor in the US. The top 10% of earners in the US take home nearly 50% of the country's total income. Under a "flat tax" system (i.e. everyone pays 20%), they would still pay nearly 50% of the country's total income tax. Under our system they actually pay 70% of all taxes. Do you think it's "unequal" for people who take home more income to pay proportionally more income taxes?
Second, even people paying zero income tax pay ~15% of taxes on income for social security + medicare, as well as a disproportionate share of their income on regressive taxes, like sales tax and gas tax.
Nope, I don't think it's unfair that the people who earn more pay more. In fact, I'm for it. However, what I'm against is even a small group not paying for it. This "small" group right now is nearly half of the population.
The argument for regressive taxes is also poor. Come to New Hampshire where there is no sales tax or W-2 income tax. The air is clean, the mountains well hiked and the people friendly. Take a look at the state's finances too. The regressive taxes there are on inheritance, dividends, investment income and a few things else I can't remember. That hits the rich far more than the poor.
This is the key point (or should be) in this discussion. The foolish spending that Delong accuses Henderson of supporting would never have been approved if the average taxpayer had to pay even $10 out of pocket for it.
The general public can only be convinced to vote for grandiose schemes when there is zero perceived cost. Since most US citizens pay nearly nothing in taxes, it's easy to get them to vote for such schemes. The tax system is designed to facilitate consent for such schemes, or at least to minimize the natural skepticism that any reasonable person would have about the ROI of most government endeavors.
Of course, you can't have negative ROI if your investment was $0, so why not cheer on the blow dried politicians and hope it works, after all someone else is paying for it.
They're going up 3% on the amount over $250,000. It's $7500. If you didn't give him access to accounting software, he would be unable to detect the presence or absence of that money.
* That would be what I call "fair".*
When I made $50,000/yr, the primary value I got from the government was some physical safety, some education, and roads so I could go to work and buy things.
When I made $500,000/yr, the primary value I got from the government was protection of my assets, access to an educated labor pool, and roads so I could transport my goods, so my workers and customers could get to them.
The value received from government doesn't correlate perfectly to income, but it does correlate strongly, and as such is a reasonable approximation of a fair price.
We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.
This is possibly the most disgusting thing I've ever seen. It's wrongheaded in so many ways that I hope you're a troll.
If you are not a troll you are a sociopath, and to be frank... your comments are so nonsensical that I doubt you'll ever have the "problem" of paying taxes that you fear.
One point I'd make to up and coming entrepreneurs: taxes aren't going to be the burden you fear. When you're growing your company you'll pay relatively little personal or corporate income tax.
Personal income tax will be relatively low because most entrepreneurs would rather reinvest in their business than buy a $20,000 watch.
Corporate will be relatively low because you won't be sitting on the cash, you'll be hiring people, spending on infrastructure or advertising and otherwise growing the business. This means your annual profits will be tiny.
The vast majority of the value you accrue will be in the business itself, and you won't have to pay on those gains until you liquidate.
Frankly, I think these discussions are bad for HN not because it's a bad idea to discuss politics or economics, but because nearly everybody on this site would get more value from an article about marketing, productivity, coding, testing, launching products, or any other topic that can actually help an entrepreneur build their business, today.
>One point I'd make to up and coming entrepreneurs: taxes aren't going to be the burden you fear. When you're growing your company you'll pay relatively little personal or corporate income tax.
That's an extremely important point.
I tell people: If you want to help startups, the tax rate does not matter hardly at all. While you are still a 'starup' you will pay very little in taxes, just 'cause you will make very little money that is not re-invested. The tax complexity makes a huge difference, though. Now, I'm sane so I pay an expert to deal with that sort of thing, but a complex tax code is worse than the costs of paying another expert.
A complex tax code, first, massively increases my risk. I know two people who will likely be in debit for the rest of their lives because they tried to do their taxes themselves while running a business. Now, I've got a professional, but there is always a chance they will screw it up. I'm on the hook for the money, no matter what. I can get out of my building lease and loans through bankruptcy, but tax debit is forever.
Next, a complex tax code makes it harder for me to plan out how to allocate my resources. With a complex tax code, it's often more profitable to play accounting games than to actually build something people want more efficiently than the competition, and I think that impoverishes us all.
(Total nitpick that I wasn't initially going to post, but it's now appeared in several of your posts and it's driving me crazy: you're using "debit" where I think you mean "debt". A debit is an accounting entry indicating something has been deducted from an account; it's basically part of an income statement, reflecting a one-time payment. A debt is money that's owed to someone else; it's part of a balance sheet, and is permanent until paid back.
Confusion is somewhat understandable when you consider that the opposite for both is "credit". When used with an article ("a credit"), it's the opposite of debit, a one-time addition to an account. When used without an article ("banks extend credit to borrowers"), it's the opposite of debt, a sum that is owed to you by other parties. English is a funny language.)
you are correct, of course, it's a mistake I make often. It's funny, I think mistakes that are not made obvious by the spell check actually make you look dumber than mistakes that would have been caught by the spell check.
It's obnoxiously difficult to identify all of the taxes (especially state and local) that are relevant to your business, let alone to actually file and pay them (both of which can be harder than you'd think.)
Until there's an easy way to verify you're compliant, I don't think there's any viable option except to hire an accounting firm to ensure compliance. If you use standard accounting software (like quickbooks) and just want them to deal with filing and paying the taxes, the bill will be small.
>If you use standard accounting software (like quickbooks) and just want them to deal with filing and paying the taxes, the bill will be small.
I make more use of the accountant than that.. It's almost like having an experienced business person on 'pay by the hour' basis. A typical contract accountant has worked with more businesses than your typical businessperson. I mean, the accountant is not much help on marketing, product development, etc... but as for the mechanics of running the office, payroll, insurance, keeping the government officials besides the taxman at bay, etc... an accountant can be really, really useful, especially when you just want to know "how do other businesses solve this problem?"
I use more than that as well, and you're right. My life got simpler when I switched to a regional accounting firm that specialized in smaller businesses.
I was simply trying to note that tax compliance is cheap enough that there's really no reason not to do it.
The government providing those services is what allows jobs that pay so well to exist. Most of the function of government is protecting property rights, and the largest part of that is creating a stable society where the poor don't have an incentive to murder the rich.
There are things that guy could do with his money that would give him tax breaks - like using that excess wealth to create jobs, donate to charities, etc.
If his burn rate is $500k a year then he's not financially any different from anyone else who's burning theorugh their paycheck - he's just got different hobbies - he's not contributing more meaningfully to society or anything like that - so why not higher taxes?
There's a few points where he really gives the game away:
-$60k/year for three children in private school
-$50k building home equity
-$50k in the 401k
But the real point is in the sections about having bought the house at the top of the market and the equity portfolio having fallen: Mr. Henderson feels poor because his net worth has dropped. He has less savings than he used to, so of course he feels he has to save several average family's annual income to catch up.
Being a high-powered law professor can't help, of course -- that's one of those jobs where your not-so-clever peers are big law firm partners and your half-decent students make your salary two years out of school. Even more so than the average 99%er, law professors have a ginormous amount of keeping-up-with-the-jones' self-pity.
From personal observation I find this statement to be true: "[the super rich] put $$$ in the Cayman Islands or use fancy investment vehicles to shelter their income".
It's for this reason that I find the concept of a "flat tax" so compelling.
There are plenty of holes in implementing a flat-tax, but fundamentally everybody putting an equal share of their income into the pool feels right to me.
A flat tax is compelling because it's more efficient, easier to deal with, and ostensibly more fair. However I don't see how it helps at all with tax fraud.
Every person I know who makes over $200K per year spends WAY too much time on tax-related paperwork instead of being productive at what they are good at.
Assume a scenario where a simplified tax (your choice of methods such as flat, no-income-but-higher-sales-tax, etc.) exists such that, say, 10 hours of time is enough to prepare a high net worth individuals' return.
Even if the net taxes were a little higher, productivity would go up because this busywork which does nothing for the economy disappears.
And since many CPA firms would be getting less hours, they could go and do something productive as well.
I agree with you that the tax code is in need of a drastic restructuring.
But realize that when you argue for a simplified tax, you're saying we need to get rid of the many incentives baked into the current code. These run the gamut, including things like:
Investing (lower capital gains rate + ability to deduct losses from gains)
Education (credits/deductions for education spending + student loan interest)
Homeownership (mortgage interest deduction - just imagine home prices without it)
Alternative energy (credits for purchasing solar panels/green cars)
Charitable giving
And so on... I'm not saying that all of these credits/deductions are needed, just that their absence would cause changes to the US far bigger than your "lots of accountants +entrepreneurs would have some more free time" intended effect.
This leaves about $90,000, a lousy $245 a day, for food, clothes, vacations, cable TV, and like that. You can walk into Nordstrom’s on Upper Michigan and spend that in a minute, and for stuff you really need. Really, I don’t know how these people get by; their adaptive skills, economical habits, and modest living style is an inspiration to all of us. Perhaps they are careful to tip no more than 15% at the Sizzler when they splurge.
"Being rich" is being able to buy something you want or need when you want or need it. I make less than $70K a year and consider myself wealthy: there's nothing that my wife and I have wanted or needed that I couldn't immediately pay for. (Single income, no kids).
Wow. Don't think I've ever been as disgusted with anything posted on HN; if you don't think you're rich when you're in the top 1% of earners, then you are an arsehole or stupid. Pure an simple.
> saith O'Hare: It’s worth a close look because the author is a law professor, not some high-school dropout Limbaugh lemming, and because the tone of entitlement and whining is typical of a fair number of the comments I got on my post about intergenerational equity (and by extension, equity).
That little snippet gives the whole game away. We have a strange situation in which Michael O'Hare, speaking as an ostensible advocate of "equity" and "the poor", nevertheless casually mentions that he would not pay attention to a word coming out of the mouth of an actual poor person, and that only a law school professor is worth listening to.
Of course, he wouldn't frame it that way. There is a tacit and unspoken mental calculation in which "Limbaugh listener" cancels out and reverses the street cred of "high school dropout", and in which "rich" reverses the intellectual cred of "law professor". So he feels fully entitled in trashing a poor person who does not share his views.
He does not spare one moment to consider that perhaps his views are a function of his power and social class as a Berkeley professor, rather than the outcome of some Platonic reasoning process. He believes what he believes and mouths what he mouths because that's what everyone else around him believes, and because political deviation is punished with social ostracism.
In particular, he is one of those who calls most loudly for "equity" without practicing it himself in his treatment of others.
The point is that there are other things in life that people value beside income. Income can be quantified, so we tend to fixate on that. But what about things like looks? Or IQ? Or power? Or status? Like the status to get people to take you seriously. Especially the last.
That can't be taxed, at least not directly. Imagine how Harvard professors would howl if Harvard degrees were handed out willy nilly, or redistributed from the (no doubt privileged) people who'd earned them to the unprivileged who hadn't. Imagine if column inches of New York Times columnists were taxed and redistributed to people who don't have as much of a say in national affairs.
The narrow focus on income happens for a reason. People who have more status than money (like O'Hare and Delong) are using the government to attack people who have more money than status. There is no question that Brad Delong will come out better in this trade, because he and those like him are the ones dictating its terms.
But, curiously enough, not angry at the senior law firm partners who extract surplus value from their associates and their clients, or angry at the financiers, but angry at... Barack Obama, who dares to suggest that the U.S. government's funding gap should be closed partly by taxing him, and angry at the great hordes of the unwashed who will receive the Medicare, Medicaid, and Social Security payments that the government will make over the next several generations.
First, his jab at entrepreneurs who "extract surplus value" is an appeal to the core tenant of Marxism: that all profit is an exploitation and an unfair "extraction of value" from labor. I don't want to have a knee-jerk reaction to his argument just because of that, but it doesn't set a good tone for me.
Second, part of the problem I have with the tax increase is this: who knows what all that money will be used for? It could be used for taking care of the great unwashed masses (disdainful much?), or it could just as easily be used to invade more foreign countries in the name of "freedom", prop up outdated and failing industries, or bail out gamblers on Wall Street. The government of the last twenty years seems to have been shockingly bad at allocating the ridiculous amounts of money they collect from us; why should we give them more?
By way of being nitpicky: there is no jab at entrepreneurs here. The two named classes of undeserving rich people are financiers and law firm partners and I put it to you that a less value-creating lot relative to compensation could hardly be found in American society.
Law firm partners, really, are a paradigmatic example of surplus value extraction: law firms get paid by people who produce things to play negative-sum games on their behalf. And while I think it's very wrong to say that all profit is an extraction of value from labor, you could hardly find a purer example of value extraction than a law firm associate being paid <$100/hour and billed out at >$300/hour...
How is being an entrepreneur different from being a financier? Both are speculative. The financier invests dollars in risky schemes, the entrepreneur invests time and energy in them. If the scheme pans out, both get rich.
Astute, but I think they are very significantly different: An entrepreneur is risking his own time and energy. Financiers are putting millions of other people's money at risk.
Well, I'd argue that the financier is an employee of people who are voluntarily risking their capital. Similarly, a startup CEO is the employee of people who are voluntarily risking their capital.
Where other realistic options do people have to invest their money but to put it in the hands of a financier? Put it in a bank/retirement account it goes to/through the financiers.
The point really is that "risking your capital" is not in and of itself a productive activity -- making stuff is. I work as an investment analyst myself which is good in both the "fun" and "profit" departments, but I'm not about to pretend that I'm creating value for the world in any but the most indirect of ways.
Who knows what the money will be used for? Take current budgets and extrapolate X years into the future -- this is federal income tax we're talking about so approximately 2/3 defense spending and 1/3 federal domestic discretionary spending. That's what it'll be used for.
Weirdly, I know people who make around $70k who claim that they're very well off, and seem to actually feel that way. But the people making $300k, $500k, $800k? Invariably they feel middle class, perhaps upper-middle-class, but not even that upper. My guess is that it has a lot to do with social circles and where you live. The guy making $70k who lives in a modest house and whose friends all work at coffee shops feels rich; the guy making $300k who lives on the upper east side of Manhattan and whose friends are all VPs doesn't.